AUD/USD recovers following weak NFPs from the US

AUD/USD cleared most of the last two session’s losses and is poised for a weekly gain.
NFPs from the US from June came in at 209K lower than expected, while wage growth remained healthy.
Lower US yields weight on the USD.

Patricio Martín FXStreet

On Friday, the AUD/USD surged to the 0.6680 area as the USD weakened following weak Nonfarm Payrolls from June. However, wages accelerated, which should maintain steady hawkish bets on the Federal Reserve and limit the USD's losses.

US reported lower-than-expected NFPs and accelerating salaries

The US Bureau of Labor Statistics released that the Nonfarm Payrolls from the US from June, and results were lower than expected. In that sense, the report stated that the US gained 209K jobs in June vs the 225k expected and lower than the previous figure of 306K. Wage growth remained healthy at 0.4% MoM, above the 0.3% expected, while the Unemployment rate stood at 3.6%.

Following the data, US Treasury yields decreased across the board. The 2-year yield fell by more than 1.70% to 4.90%, while the 5 and 10-year rates to 4.29% and 4.02%, respectively. That being said, markets are assessing the Federal Reserve's next steps as Jerome Powell stated that further tightening may be required driven by a tight labour market. However, as salaries aren’t declining, they pressure the Fed to maintain its hawkish stance and contemplate further tightening.

As for now, according to the CME FedWatch Tool, investors continue to fully discount a 25 basis points hike in the July meeting of the Fed which would take the rates to the 5.25%-5.50% range. All eyes are now on next Wednesday's Consumer Price Index (CPI) data from June from the US, which will continue modelling the expectations for the next Fed decision.

AUD/USD Levels to watch

The daily chart indicates that the outlook for the Aussie has improved, but still the bigger picture suggests that the sellers are in control. The Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) still hold negative territory while the pair trades below the 20, 100 and 200-day Simple Moving Averages.

Resistance Levels to watch: 0.6685 - 0.6696 area (convergence of the 100 and 200-day SMAs), 0.6730 (20-day MA)
Support Levels to watch: 0.6630,0.6600,0.6570.

AUD/USD Daily chart

AUD/USD

Overview
Today last price	0.6684
Today Daily Change	0.0058
Today Daily Change %	0.88
Today daily open	0.6626

Trends
Daily SMA20	0.6729
Daily SMA50	0.6675
Daily SMA100	0.6689
Daily SMA200	0.6696

Levels
Previous Daily High	0.6688
Previous Daily Low	0.6599
Previous Weekly High	0.6721
Previous Weekly Low	0.6595
Previous Monthly High	0.69
Previous Monthly Low	0.6484
Daily Fibonacci 38.2%	0.6633
Daily Fibonacci 61.8%	0.6654
Daily Pivot Point S1	0.6587
Daily Pivot Point S2	0.6549
Daily Pivot Point S3	0.6498
Daily Pivot Point R1	0.6676
Daily Pivot Point R2	0.6726
Daily Pivot Point R3	0.6765

Author

Patricio Martín

FXStreet

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

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